Kathy is a senior business trial attorney with more than 25 years experience prosecuting and defending claims for clients involved in Ponzi scheme matters and in bankruptcy proceedings. Kathy’s practice includes recovering assets for clients in complex fraud cases on under standard fee and alternative fee arrangements. Kathy also serves as a mediator in bankruptcy matters, in complex business disputes, and in matters requiring an expert on fraud or Ponzi schemes.

Sunday, April 30, 2017

April 2017 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for April 2017. The reported stories reflect: 8 guilty pleas or convictions in pending cases; over 65 years of newly imposed sentences for people involved in Ponzi schemes; at least 7 new Ponzi schemes worldwide; and an average age of approximately 54 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.

Connie Apostelos aka Connie Coleman, 51, pleaded guilty to a charge that she knowingly attempted to deposit a check for more than $224,000 that was from investors and was intended for illegal purposes. Although she pleaded guilty to this charge, she did not plead guilty to a charge that she knew of her husband’s, William Apostelos’, fraud. William ran a $70 million Ponzi scheme in which about 480 victims lost about $20 million. William Apostelos plead guilty in February, and Steven Scudder, 62, admitted in January to using his role as an attorney to help solicit funds from Apostelos’ firm, WMA Enterprises LLC.

Troy A. Barnes, 53, was sentenced to 33 months in prison in connection with a Ponzi scheme that he ran along with Kristine L. “Kristi” Johnson through his company Work with Troy Barnes, or WWTB, that did business on the internet under the name “The Achieve Community.” The program advised victims that it was “not an investment program” and cautioned them, “please don’t use that term when you speak or post about our re-purchase strategy.” There are more than 10,000 victims of the scheme. The scheme promised 700% returns. Johnson was previously sentenced to 21 months in prison for her role.

Carl Keith Battie, 60, was sentenced to 14 years in prison in connection with a Ponzi scheme to which he pleaded guilty last year. The scheme involved the supposed purchase of distressed properties that Battie would fix and flip, promising annual returns of 16% to 35%. At least 708 investors were defrauded out of about $9 million. Battie’s co-conspirator, Christopher Dannenfeldt, died in 2014.

Jamie B. Campany, 53, has been ordered to pay $17.4 million in restitution to his victims. Campany is serving a 12 year prison sentence for running a Ponzi scheme through purported precious metals investment firm Global Bullion Exchange. The scheme defrauded more than 1,400 customers.

Chad R. Deucher, 43, pleaded guilty to charges relating to an alleged Ponzi scheme that defrauded investors in his real estate firm, Marquis Properties LLC, out of $16 million. Deucher defrauded nearly 200 investors out of $28 million, and about 170 of them are still owed $16 million. Deucher promised his victims returns of 22%.

Stephen S. Eubanks, 48, pleaded guilty to one charge in connection with a Ponzi scheme that defrauded 32 investors out of $435,000. Eubanks took in $529,000 into his Eubiquity Capital financial firm. He legitimately invested some of the money but spent $145,000 on himself for vacations and boat payments, among other things.

Alan Gold argued an appeal of his 6 year sentence to the Seventh Circuit, which did not appear inclined to reverse his sentence. In 2016, Gold pled guilty to 5 counts relating to a Ponzi scheme that defrauded 13 people out of more than $18 million. Judge Posner referred to Gold as “a little Madoff” and a “thorough crook,” noting at the hearing that the “The sentence was entirely appropriate.”

Robert Allen Helms, 52, and Jenniece Kaelin, 55, each pleaded guilty to charges that they defrauded at least 80 investors in an oil and gas scheme run through their firm, Vendetta Royalty Partners. They raised about $17.9 million and misappropriated funds for a separate firm called Vendetta Management, among other things.

John Hogan, 77, pleaded guilty to defrauding customers of his company, Hogan & Associates, out of $8.2 million. Hogan was an insurance agent who sold life insurance policies and convinced client to borrow against the cash value of the insurance products so he could supposedly make short term loans to others. In reality, he did not make the loans but he used the money to finance his 25 homes and investment properties.

Matthew Howell, a lawyer in Utah, has been accused of helping his client destroy evidence. Howell had previously been accused of assisting Chad R. Deucher in running a Ponzi scheme through Marquis Properties. Howell is accused of failing to preserve electronically stored information by turning it over to Deucher, his client.

Francis Illarramendi, 58, was ordered to pay almost $27 million in connection with a Ponzi scheme. Illarramendi pleaded guilty to criminal charges in 2011 related to the scheme for which he was sentenced to 13 years in prison. The scheme involved between $200 million and $723 million and was operated through numerous hedge funds including Michael Kenwood Asset Management, Michael Kenwood Energy and Infrastructure, Michael Kenwood EI Solar, Michael Kenwood Venezuela Fund and Short Term Liquidity Fund and Highview Point Partners.

Nemelee Liwanag Jiao, 47, was indicted and accused of running a $1 million Ponzi scheme that defrauded 35 investors. Jiao promised investors returns of 10% to 100% in relation to two nonprofit schools in the Philippines called Shepherd’s Light Learning Center and Lord of Peace. She used the money on personal expenses, including a country club membership.

Robert Leland Johnson IV and Marisa Elena Johnson were sued by the CFTC in an enforcement action alleging that they took in at least $1.73 million in a scheme involving commodity futures fraud, among other things. The alleged Ponzi scheme was run through Capitol Equity FX.

Mark Anderson Jones, 64, had a judgment entered against him in a case brought by the SEC for a Ponzi scheme. Jones solicited investors to provide loans to Jamaican businesses. Jones promised 15% to 20% interest on these bridge loans and provided investors promissory notes and personal guarantees. Jones pleaded guilty last year to the scheme.

Andrew D. Kelley, 41, pleaded guilty to charges relating to an alleged $3 million Ponzi scheme that he ran through Blackbird Capital Partners. Kelley falsely represented that he had developed an algorithmic software program that made up to 300% returns in his day-trading business. Kelley also lured investors by telling them that he was a faithful member of The Church of Jesus Christ Latter-Day Saints.

Matthew A. Krimm, 35, and his company, Krimm Financial Services, were charged by the SEC with defrauding at least 25 investors out of more than $1.69 million. Krimm was a mortgage loan officer who allegedly falsely claimed that he ran a “highly successful” mortgage loan business. The Delaware Department of Justice filed charges against Krimm, alleging that Krimm ran a Ponzi scheme.

Ronald Earl McCullough, 45, was sentenced to 10 years in prison in connection with a Ponzi scheme that he ran with his partner, David Christopher Mayhew, 44. Mayhew was sentenced to 26 years last year. McCullough had pretended to be a religious leader to convince people to invest at least $1 million in a foreign exchange group in which it promised returns in 30 days.

Mark Morrow, 55, is expected to plead guilty to charges that he participated in a $35 million Ponzi scheme run through Summit Wealth Management and Detroit Memorial Partners. The scheme was shut down in 2015 and Morrow’s partner, Angelo Alleca, 47, pleaded guilty last year.

Curtis A. Peterson was ordered to disgorge $569,250 in commissions that he received while selling securities in a $70 million Ponzi scheme. Peterson sold securities in the “Virtual Concierge” scheme run through JCS Enterprises Inc. and T.B.T.I. Inc. The principals of that scheme, Joseph Signore and Paul L. Schumack II, promised investors returns of up to 500%. Signore, Schumack, Signore’s wife, Laura Grande-Signore, and Craig Allen Hipp were sentenced to 20 years, 12 years, 7 years and 7 years, respectively, over the scheme.

Bonnie Lynn Recinos, 56, was sentenced to 4 years and 7 months in prison and ordered to pay more than $1.5 million in restitution in connection with a Ponzi scheme that she ran through her business, Farr and Associates. Recinos and alleged co-conspirator, Julie Ochoa, offered investors returns from investments in Arizona real estate, and promised that the investments were secured by Farr assets. The schemed caused losses of $1.5 million to more than 10 victims.

Cheskel Strulowitz was accused by a group of investors of running a Ponzi scheme in which they invested $20 million. The investors have alleged damages of $90 million in connection with the real estate scheme.

C. George Tate, 48, an ex-NBA player, lost his appeal of his conviction and 9 year prison sentence on wire fraud charges in a $2 million real estate Ponzi scheme run through The George Group. The Third Circuit denied his appeal finding that the “new” evidence the court was asked to review did more to incriminate him than exonerate him.

Roger Williams was indicted on charges relating to an alleged Ponzi scheme. Williams withdrew his guilty plea last month and has now been indicted in connection with an investment program. Williams is accused of misrepresenting the earnings on his clients’ investments with Dash Holdings and Open Door Investment. Nearly 100 people invested with Williams, who was the pastor of a church and lost $1 million.

Scott Wolas aka Eugene Grathwohl aka Frank Amolsch aka Drew Prescott aka Allen Hengst aka Endicott Asquith aka Cameron Sturge, 67, was arrested and charged in connection with an alleged Ponzi-like scheme that defrauded more than a dozen people out of $1.5 million. Wolas operated a real estate business known as Increasing Fortune Inc. under his Grathwohl alias. He collected more than $1.5 million from at least 19 investors and promised to pay out at least 125% of the profits from home construction. The real Eugene Grathwohl is a friend of Wolas’ ex-wife. Wolas is a former Hunton & Williams partner who disappeared nearly 20 years ago when fleeing from other charges relating to a $100 million fraudulent liquor-exporting scheme.

INTERNATIONAL PONZI SCHEME NEWS

Canada

Milowe Brost, 63, had his appeal of his conviction a 12 year sentence denied. Brost was convicted, along with Gary Sorenson, in 2015, in connection with a Ponzi scheme in which more than 2,400 investors lost between $100 million to $400 million.

Virginia Mary Tan, 65, has admitted to fraudulently raising at least $30 million in a Ponzi scheme. Tan defrauded about 50 investors, promising them 12% to 24% returns, and ran a business called Letan Investments Management. Tan raised the money for short-term high-interest loans to be used for short-term financing, but did not actually invest the money in real business. Tan filed bankruptcy and the bankruptcy trustee’s website reports that 177 investors are owed more than $40 million.

China

Shaved-head men and women promoted what is alleged to be a Ponzi scheme that involves a virtual currently called “wuxingbi” or “five phases money.” Investors can buy into the program in levels priced at 500, 2,500 and 5,000 yuan, and they are encouraged to find additional investors for which they would receive rewards.

Dubai

A Dubai court ordered Exential chief, Sydney Lemos, and his companies to pay back investors who had lost money in a Dh1.1 billion Ponzi scheme. The scheme was disguised as a foreign currency trading program and promised returns of up to 120%.

India

Shekhar Chandrashekhar aka Sukesh Chandrasekhar was arrested on charges that he defrauded investors out of Rs 19 crore in a Ponzi scheme.

The 18 organizers of OneCoin were arrested on allegations that they were running a Ponzi scheme.

Bijay Kumar Rout, the managing director of Adarsh Group, was sentenced to 4 years in prison in connection with a Ponzi scheme. Adarsh Stalfed Farms and Adarsh Wealth Ventures Pvt were also found guilty in connection with the Ponzi scheme.

Malaysia

An alleged scheme run through JJPTR is being investigated. The scheme allegedly defrauded at least 500 investors and was operated as a foreign exchange trading company. JJPRT is an acronym that can either stand for Jie Jiu Pu Tong Ren in Chinese (salvation for the common people), or JJ Poor to Rich. JJPTR stopped paying investors their promised 20% returns and founder Johnson Lee reported that over $50 million was lost.

South Africa

A curator was appointed to oversee the distribution of funds in the case of Colin Davids, 49. Davids is a pastor who ran a foreign exchange trader alleged to be a Ponzi scheme through Platinum Forex Group. Platinum had promised investors up to 84% returns on foreign exchange investments. An auditor’s report stated that a total sum of R329m came in from over 2,000 investors.

Thailand

450 victims filed complaints with police relating to the WealthEver Co. Ltd. scheme. The managing director of WealthEver, Ms Pasit Arinchalapit alias Sinsae Shogun, 30, was arrested and detained for questioning. About 2,000 people may have been defrauded, believing they had bought a package tour to Japan during Songkran festival.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

Victims of Blue Mountain Consumer Discount Co. were award $6 million against the company and Walter “Buddy” Lambert, 75. Lambert was sentenced in 2015 to two years in prison for running a Ponzi scheme.

A court stayed the SEC’s case against Joseph Meli and Matthew Harriton over their alleged fraudulent scheme in soliciting investor funds for “Hamilton” and other popular show tickets. The SEC has accused the men of raising more than $97 million from at least 138 investors, promising large returns. The SEC case is stayed while criminal charges against Meli are proceeding.

The Fifth Circuit held that the Foreign Sovereign Immunities Act bars the victims of Stanford International Bank Ltd. from bringing claims against Antigua and Barbuda. The Fifth Circuit reversed the lower courts finding that Antigua and Barbuda had waived sovereign immunity. The victims had claims that Antigua and Barbuda acted as a participant in Allen Stanford’s scheme and provided Stanford and his businesses a safe harbor from regulatory scrutiny.

Kathy Bazoian Phelps

Ponzi-Proof Your Investments

An Investor's Guide to Avoiding Ponzi Schemes and Other Fraudulent Scams

Kathy has significant experience with the issues arising in Ponzi scheme cases, and in tracing and recovering assets in complex fraud cases. She has represented all types of parties in Ponzi scheme cases, including investors, defendants in litigation, trustees, and receivers. She has extensive litigation experience in a wide variety of bankruptcy litigation matters, representing operating and liquidating trustees, debtors, and secured and unsecured creditors. Kathy also serves as a mediator in bankruptcy matters, in other complex disputes, and in other matters requiring an expert on fraud or Ponzi schemes.

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